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Import/Exports Send Pre-Markets Lower; Big Banks Beat

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Friday, April 12th, 2024

We complete our inflation summary this week with new data out this morning. Import and Export Prices for March help articulate some of the other economic data we’ve seen throughout this week, including that which sent trading markets into a tailspin mid-week. Pre-market futures, paring losses on Q1 results from some of Wall Street’s biggest banks (see below), were sent back southward on today’s Imports and Exports: -220 points on the Dow, -35 on the S&P 500 and -150 for the Nasdaq.

Import Prices came in hotter than expected. A headline of +0.4% is 10 basis points (bps) higher than the unchanged +0.3% for the prior month. Subtracting volatile fuel prices, this number dips to +0.1%, 10 bps lower month over month. Fuel imports grew +4.7% in March — not much of a surprise for anyone paying attention to the increasing tensions in the Middle East, which may threaten oil shipping channels. This marks a jump of 3 1/2x the previous month on fuel price inputs.

Meanwhile, Export Prices have come down considerably. The March headline flipped month over month to -0.7% from +0.7% in February. Agriculture commodity exports spurred the downward slide, -0.7% overall and -8.1% year over year. Exports to China and Japan, while still positive by +0.1% and +0.2%, respectively, are down from +0.8% and +1.3%, respectively, the previous month.

These figures strongly suggest our current inflation levels are mostly home-grown. This can be attributed to inflated labor costs, especially in the services sector, on higher minimum wages in much of the country (and corporations’ unwillingness to eat these costs themselves). As we can see in this month over month data, however, these numbers can change rather drastically month over month, largely depending on global conditions. Right now, U.S. investors are seeing “risk off” scenarios regarding the global marketplace, particularly with the Middle East, China and Ukraine. These may change, but they may also get worse.

Meanwhile, JPMorgan Chase (JPM - Free Report) beat estimates on both top and bottom lines. Earnings of $4.63 per share outpaced the $4.18 in the Zacks consensus, +10.77%, while revenues of $41.93 billion surpassed expectations by +2.52%. Yet the stock is trading down on the news, following a rather murky outlook on loan growth visibility, while guidance on net income interest and expenses have both come down. Shares had also been up +15% year to date, and are down -2.7% at this hour. For more on JPM’s earnings, click here.

Citigroup (C - Free Report) also put up notable outperformances on both earnings and revenues. A bottom line of $1.58 per share rolled past the $1.13 analysts were looking for, while revenues of $21.1 billion in the quarter notched higher than the $20.3 billion anticipated. Operating expenses grew +7% year over year, and the bank was not particularly hamstrung by a one-time FDIC charge of $251 million. Citi has only missed on earnings once in the past five years. Shares are up +0.5% in pre-market trading.

Wells Fargo (WFC - Free Report) makes it a trifecta for the big Wall Street banks on this first big day of Q1 earnings season. Earnings of $1.26 per share outshone the expected $1.10 (and even nudged out the year-ago tally by 3 cents), for a positive earnings surprise of more than +14%. Revenues in the quarter reached $20.86 billion, improving on the Zacks consensus estimate by +3.5%. Shares are selling somewhat on a down morning for the markets, but have earned +15% since the start of the year. For more on WFC’s earnings, click here.

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